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Red Robin (RRGB) Stock Rises on Q1 Earnings & Revenue Beat


Shares of Red Robin Gourmet Burgers Inc. RRGB rallied over 15% in afterhours trading on May 16, after the company reported better-than-expected first-quarter 2017 results.

Earnings & Revenue Discussion

Red Robin’s adjusted earnings of 89 cents per share surpassed the Zacks Consensus Estimate of 58 cents by 53.4%. However, earnings declined 29.9% year over year, owing to lower comps and margins.

Revenues of $418.6 million came above the Zacks Consensus Estimate of $416.7 million by 0.4% and grew 4.1% year over year driven by higher restaurant revenues, somewhat offset by lower franchise royalties, fees and other revenues.

Behind the Headline Numbers

During the quarter, Red Robin’s restaurant revenues went up 4.2% year over year to $413.4 million on the back of new restaurant openings and acquisitions, somewhat offset by lower comps and closed restaurants. Franchise royalties and fee revenues, however, decreased 4.7% to about $5.1 million due to the loss of royalties from 13 franchised restaurants acquired during the first quarter of 2016.

Company-owned restaurants’ comps declined 1.2% year over year, better than the prior-quarter comps decline of 4.3%. The decrease was led by a 1.7% decline in traffic, partially offset by a 0.5% rise in average guest check.

Despite lower cost of sales and occupancy costs, restaurant-level operating profit margin decreased 180 basis points (bps) to 20.7%, due to higher labor costs and other restaurant operating expenses.

Adjusted earnings before interest, taxes, and amortization (EBITDA) decreased 6.3% to $45.8 million from $48.9 million in the year-ago quarter.

Guidance for 2017

For full-year 2017, Red Robin anticipates earnings in the band of $2.80 to $3.10 per share, up from the earlier guided range of $2.70 to $3.00. The Zacks Consensus Estimate for 2017 is pegged at $2.74.

Red Robin expects total revenue growth in 2017 to be between 6% and 8%. This includes comparable restaurant revenue growth in the range of 0.5% to 1.5%. Additionally, the growth is expected to be driven by increased operating weeks associated with locations opened in 2016 and 2017, as well as the 53rd week in 2017.

Adjusted EBITDA in 2017 is likely to be in between $145 million and $155 million.

Capital expenditures are expected to be roughly between $85 million and $95 million.

Meanwhile, the company plans to open roughly 17 and close nine Red Robin locations in 2017.

Red Robin has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Red Robin Gourmet Burgers, Inc. Price, Consensus and EPS Surprise

Red Robin Gourmet Burgers, Inc. Price, Consensus and EPS Surprise | Red Robin Gourmet Burgers, Inc. Quote

Peer Releases

McDonald's Corp. MCD reported first-quarter adjusted earnings per share of $1.47, beating the Zacks Consensus Estimate of $1.32 by 11.4%. Earnings also increased 18% year over year.

Chipotle Mexican Grill, Inc.’s CMG first-quarter 2017 adjusted earnings of $1.60 per share outpaced the Zacks Consensus Estimate of $1.28 by 25%. Earnings compared favorably with the year-ago quarter figure of a loss of 88 cents per share, given a substantial rise in revenues.

In first-quarter 2017, The Wendy’s Company WEN posted earnings of 9 cents per share that outpaced the Zacks Consensus Estimate of 8 cents by 12.5%. However, earnings declined 18.2% year over year mainly due to lower sales.

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